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Tuesday, 8 May 2018

Can the USA and China reach an agreement?

Por MRod

According to international media the two days of talks between the top-level economic and trade teams of China and the United States have failed to seal an agreement on Friday that will satisfy both parties. The two countries agree to "strengthen their communication” but recognize that "in some cases there are great differences".

As stated by the Chinese news agency Xinhua at the end of the meeting, the filtering of a list of demands by the United States, practically impossible to fulfill for China, showed how far away the positions between the two nations are. The delegations of China and the United States "had a deep exchange of views on issues such as the increase of US exports to China, bilateral trade in services, bidirectional investment, protection of intellectual property rights and resolution of tariff issues, reaching a consensus in some areas", Xinhua explained.

However, "both parties recognized that, since there are still considerable differences in some matters, continuous work is required to achieve greater progress." None of the representatives made statements after the meetings. The establishment of a joint working mechanism has not been accompanied by a commitment to withdraw tariffs already in effect, which affect merchandise valued at 6,000 million dollars, nor the intention to suppress or delay those that are to come, for 200,000 million dollars according to the provisional lists that both the United States and China have published.

The leak of a document with the demands of Washington, sent to Beijing before the opening of the meetings, shows that the delegation used tactics similar to those of President Trump, following what he himself explained in his book The art of the deal, as published El País. The team led by Secretary of the Treasury, Steven Mnuchin, asks China for an extensive list of commitments that are practically impossible to achieve, the most relevant being a reduction in the trade deficit of 200,000 million dollars from now until 2020 (the trade imbalance was in the 375,000 million at the end of last year).

In addition, China is required not to subsidize the high-tech sectors included in the industrial modernization plan "Made in China 2025", greater protection of intellectual property, end "forced" technology transfers, withdrawing its complaints to the United States in the World Trade Organization or until it pledges not to retaliate if Washington decides to impose tariffs on Chinese products. Too much to ask?

China has not given clues about what it is willing to negotiate and has warned, prior to the meeting, that it will not accept "unreasonable demands". Although analysts consider that Beijing can give ground in the commercial field, increasing the purchases of American products or reducing the tariffs of these, it is virtually impossible to renounce its industrial or technological policy as it is a strategic objective of the authorities.